Ever contemplated becoming a consultant? Living free of the corporate bureaucracy? Collecting those big fees? Traveling the world?
But how does one get started anyway?
In this article, I’ll share insights gleaned from almost 30 years as a full time EMC consulting engineer. While not on my radar screen as a young engineer, it has been great fun as well as financially and intellectually rewarding.
When someone finds out I’m a consultant, it often precipitates four frequently asked questions, usually in this order:
- How do you get your clients?
- How do you decide what to charge?
- How do you decide what to consult about?
- How do I get started?
We will briefly explore each of those questions here.
Before we begin, however, here is some background information…
I didn’t start out intending to consult. But less than two years into my first engineering job, I was suddenly laid off. It wasn’t personal, as about half of the company was let go, but it did start me thinking about the career I had just begun.
In retrospect, the layoff radicalized me – I just didn’t realize it at the time. Stung by the layoff, I started to explore options for making a living.
At first, my sights were set low. I took a class on television repair, and then a class that led to a Master Electrician’s license. I dropped my earlier MSEE studies. The idea was to develop readily marketable skills to tide me over in case of another layoff.
Then I set my sights a bit higher, and stumbled into consulting. The initial spark was a class on the Professional Engineer (PE) license, a credential not widely needed in the electronics industry, but highly recommended for consulting engineers.
Soon after, the consulting interest was fanned by a fellow engineer who recruited me to teach an evening class at a local vocational school. That fellow engineer was Bill Kimmel, who shared the PE class and who became my good friend and business partner.
We began consulting for the vocational school, advising on their curriculum and even creating new courses. This led to several moonlighting projects, such as establishing a two year program for printed circuit board designers, and helping the local medical society choose a new computer system. Since we both worked for a defense contractor, these projects avoided conflicts of interest – always important when doing part time consulting.
We continued moonlighting for several years, but the itch to go full time increased. Eventually, we made the jump to independence in October 1987. The first day in business, however, the stock market crashed. It was scary, but we survived. Looking back, we often mused that “the first day in business was the worst day in business.”
We decided to focus on EMI/EMC design, an area in which we both had considerable experience. This was an important decision. While we were moonlighting, we did not focus on one area. But as full time consultants, it is better to be an “expert” rather than “jack of all trades.” It also makes it easier to align both the technical and marketing efforts – to be soon discussed.
Thus began our consulting adventure. Since 1987, we solved or prevented hundreds of EMI/EMC problems – from integrated circuits to outer space, and much in between. We consulted throughout North America. We even traveled the world. It has been great fun.
But all good times eventually come to an end. Last year, Bill Kimmel passed away from cancer.
Upon reflection, I’ve pulled back from the consulting to focus on EMC training, and on sharing my expertise on consulting. Thus, this article, which I hope you enjoy and find useful.
One more thing. This first section was meant to establish my credibility on the subject, which you must do to become a successful consultant. You must also establish your visibility, which is what we will discuss next. Remember, it’s all about credibility and visibility. That, and serving your clients.
FAQ #1 – How do you get your clients?
When asked this question, I often reply “Peddle your behind off…” Since sales and marketing are anathema to many engineers, I then soften it by pointing out that selling consulting services is not like selling used cars. Rather, you are like a doctor providing professional services.
But even so, you still need to market and sell those services. No, with rare exception the world will NOT beat a path to your door. You need to get out, mow the weeds, and light the way.
There are actually three elements in obtaining clients:
- Marketing – pre-customer contact – like planning a fishing trip.
- Sales – post-customer contact – like landing the fish
- Lead Generation – the bridge between sales & marketing – like figuring out which bait to use.
So just think of these efforts like fishing. Or at least just another engineering problem to solve.
Let’s begin with marketing. Here are three recommendations.
First, define your niches. Consulting is a niche business. As a small business, you must focus your efforts and resources. I suggest three niches:
- Technical – WHAT you do
- Industries – WHO you do it for
- Geography – WHERE you do it.
We began with EMI/EMC design, for military systems and commercial computers, in the upper Midwest. We eventually expanded.
But start small. It is fine to change directions or expand your services over time. Markets and technologies change, and you need to adapt. But don’t spread yourself too thin — when starting out, you MUST focus while remaining flexible to changes in your marketplace.
Next, define your ideal client. Are they fellow engineers who need your help? Or maybe government agencies? You want to identify:
- Those with needs – PROBLEMS
- Those with wants – GOALS
- Both recommenders and BUYERS
As a consulting engineer, I recommend steering clear of consumers, since businesses and the government are more willing to spend money to solve or prevent technical problems.
Finally, decide how to best reach them. Where do they “hang out”? Magazines, professional groups, conferences.
Establish that important “credibility and visibility.” Create “marketing gravity.” The ultimate goal is to have them call you first.
As management consultant Peter Drucker said, “The better the marketing, the easier the sales.”
Now let’s move into sales. Here are some quick comments:
First, selling consulting is different. You are selling yourself, not a product. It is not about manipulation, but all about helping. Think like a doctor, not like a peddler.
Be sensitive. The biggest customer concerns with consultants are whether you can help, and whether you are easy to work with. Confidence is fine, but keep your ego in check. Arrogance is a killer with clients. Cost is usually not a key factor.
So have conversations. Ask questions so you can diagnose and qualify. The first goal is to see if you can help, and if it is a good fit. The second goal is to determine if the client can pay for your services. Remember, this is a business.
Finally, don’t forget to “ask for the order.” Ask about schedule. Offer a quotation or budgetary estimate, but only after summarizing the tasks to be done. Don’t worry about rejection — you won’t win them all. But done right, you will win enough and will end up with happy clients.
And now, lead generation — the bridge between marketing and sales.
After almost thirty years, I found there is no magic bullet. The more lines in the water, the better. There is an exponential multiplier effect. For example, if someone sees an article, hears you speak at a conference, and then gets a recommendation, you are almost sure to get the business. Particularly if the client first calls you.
Here are some methods I’ve used over the years:
- Writing – articles, books, blogs, newsletters
- Speaking – local professional meetings, symposiums
- Networking – professional organizations, directories, trade shows
- Seminars – short tutorials to multi-day classes
- Internet – web site, webinars, blogs
- Referrals – past clients, vendors, and others
You don’t need to do them all. Choose something you like to do, make a schedule, and then follow it. You may not get immediate results, but it will pay off in the long run.
FAQ #2 – How do you decide what to charge?
There are three issues here – establishing your rates, presenting your rates, and (sometimes) negotiating your rates.
First, establishing your rates. Some people make this complicated, and there are even entire books written on the subject. But as an engineer, I like to keep things simple. So here are three methods to consider when starting out. You can always refine them as needed.
The first method is “Quick and Dirty”, and is based on your market place value. No, it is NOT your salary – rather it is your salary PLUS overhead PLUS profit. This is how management sees employees from a cost view. No need to be cheaper than an employee. Actually, you are worth more as an expert consultant.
A quick way to get a ballpark hourly rate is to use your current annual salary, add 100% for overhead, add another 20% for profit (you are in business now), and then divide that number by 1000-1200, a reasonable goal for billable hours in a year.
The second method is calculating the actual overhead. This is more precise, and is often required for government contracts.
In this case, you include insurance (health, liability, disability), company paid Social Security/Medicare (also known as the “self employment tax”), non-billable time for marketing/administration/vacations, office expenses (rent/equipment), company auto, and any other legitimate business expenses. And a reasonable profit, of course.
The third method is the competitive evaluation. Ask around and review salary surveys (the IEEE does an annual one for consultants.) When starting out, I recommend midrange to the upper third for your specialty. If you can get more, do so – you are a business, not a charity. And remember, consulting rates are considerably higher than contracting rates, which assume almost full employment.
Next comes presenting your rates. I recommend not quoting hourly rates, but rather project rates. If you are having a bathroom remodeled, do you care what the contractor charges per hour? No, you want a quote on the entire project. You should do the same.
The hourly rate is for your calculations. The only time I quote hourly rates are for phone calls or other short consultations. Even then, on site consultations are a minimum of four hours plus travel time.
The project rate is what should be submitted as part of a proposal. In order to do that, you need to mutually agree on the tasks and time frame. I submit quotes as “Budgetary – not to exceed without client approval.” That protects both parties. If the scope/schedule goes up, the costs will go up — but only with the client’s approval. Furthermore, I don’t guarantee results — only my best professional efforts — just like a doctor or lawyer.
The ROI (return on investment) rate is popular with management consultants, but less so for engineering consultants. I do NOT advocate contingency rates, which may be suggested by clients bidding on government proposals. Nor do I recommend equity. As a small business, you want cash. If they can’t afford it, move on.
Payment terms vary. For established companies, I accept purchase orders with 30 day payment terms. After being the victim of a client bankruptcy, I now get a $2500 advance for any travel expenses. If the company is very small or has been poor past payment record, I get the full amount in advance. If lawyers work that way, why not engineers?
Last, but not least, are negotiations. When starting out, you may be tested by buyers. If that happens, reduce the scope in return for reducing the price. In cases where the budget is truly limited, this may help the client. But NEVER reduce the price alone — do NOT buy the business. And be prepared to walk – bad business is worse than no business.
FAQ #3 – How do you decide what to consult about?
First, choose something you enjoy. Leverage on your past experience. This is not the time to break into something entirely new. Clients pay for your experience and judgment, not your learning curve.
Consider ALL your past experiences – technical, management, education, even volunteer efforts. You may have more valuable experience than you realize.
Consider bridges where different disciplines meet. A favorite example is a young lawyer I once met on a plane who became a jury selection consultant. After several years she decided she didn’t enjoy law as much as the psychology of juries. So she started a consulting practice, was having fun again, and became quite successful. And as a lawyer herself, she had instant credibility with her clients.
Consider areas that others don’t want to do. Like the jury consultant above, or like EMI/EMC. I often joke that, as an EMC engineer, I sometime feel like the septic tank man. Most engineers are happy to pay somebody else to do what I do. But that is fine, as I enjoy it and have for many years.
Other examples similar to EMC include power electronics, analog electronics, RF electronics, product safety, power quality, ESD, lightning, test lab audits, test plans, technical construction files, shield room design, and more. I’ve known successful consultants who specialized in each of these areas.
Consider barriers to entry. These may include education, experience, or professional licenses. Don’t even think of offering medical advice if you are not a licensed and educated MD. If it is easy or “cool,” avoid it. Better to be in a niche where it takes some time and effort.
Incidentally, a PE license is not mandatory for EMC consulting, but if you don’t have it, don’t used the term “engineer” in your business name or on your business cards. If you do, sooner or later you may hear from your state board of engineering registrations. They can, and will, take legal action in most states. No fair, you say —
well, other licensed professions such as architects, lawyers, and accountants have similar restrictions.
FAQ #4 – So how do I get started?
As the old saying goes, “How do you eat an elephant? One bite at a time.” So it is with starting a consulting practice. Take it one step at a time — but keep on stepping.
The first step is to set up your company. You need professional advice here – don’t try to do it all yourself. Besides, isn’t that what you are offering to your clients – professional advice?
Here are four areas to address:
- Legal – find a small business lawyer to help you with incorporations, tax IDs, etc. You may also need business or professional licenses. If needed, get them first.
- Accounting – find a small business accountant to help set up your books and to help with your taxes, retirement plans, and other government requirements.
- Insurance – find a business insurance broker to help you with medical, life, disability, and liability insurance. Another option here is professional organizations like the IEEE.
- Administration – set up your quotations, agreements, data base, etc. Easy to do with computers, but advisable to have things in place prior to starting out.
You should be able to accomplish all of this in a few weeks or less. If you are spending more time on this phase, you are probably procrastinating.
The next step is to commence your marketing efforts. Don’t delay on this. Like planting a garden, the sooner you start, the sooner you get results.
Here are three areas to address:
- Collateral – Business cards, letterhead/envelopes, simple brochure, web site. All help create that all important credibility, and signal you are serious about your business.
- “Push” marketing – Phone calls, e-mail, letters. Contact everyone in your network to let them know you are in business. Don’t be pushy and ask for business, but with enough contacts the odds are good that you will turn something up.
- “Pull” marketing – Networking, speaking, writing, etc. This is usually longer term, but still needs to be done.
Make a plan and then execute. Be persistent, and be prepared financially — six months to a year is typical until you get back to your old salary.
That covers four key questions on starting a consulting practice. I had the same questions when starting out many years ago, and several people helped me with answers and guidance. It is in the same spirit I offer this advice to you.
For more details on consulting, please visit my blog at www.jumptoconsulting.com. Started in 2010, it now has about 200 posts. There is a book in the wind. My hidden agenda is to help my interested engineering colleagues enjoy the same consulting adventures I have enjoyed.
Daryl Gerke, PE, has been a successful consulting engineer for 38 years. Mr. Gerke has a BSEE (Electrical Engineering) degree from the University of Nebraska, is a Registered Professional Engineer (PE), and a NARTE Certified EMC Engineer (NCEE). He can be reached at email@example.com.
Thanks for sharing and it is a well written article with more insights , truly an inspiration one for people like me and other folks across the globe
Thanks for the share. Seems very useful.
This is good to read for thos planning to join consulting
Thanks for the kind comment. If you have not done so, please join me at http://www.jumptoconsulting.com for more ideas and information on starting you own consulting firm. Good luck!
Daryl, thank you so for sharing these insites! I am in the start up stage and find your comments very helpful.